Northwestern offers $12.7M for O’Donnell (UPDATE)

Northwestern Mutual Life Insurance Co.is proposing to buy O’Donnell Park from Milwaukee County for $12.7 million.

O’Donnell Park includes a public parking garage and a park plaza at 929 E. Michigan Ave. in downtown Milwaukee and is across East Wisconsin Avenue from the site of Northwestern Mutual’s future $450 million office tower. The tower is expected to house about 2,800 employees, a significant increase from the 1,100 who had worked in the Northwestern Mutual building that was demolished this year. Construction of the new tower is expected to begin in September and be complete by 2017.

Teig Whaley-Smith, Milwaukee County’s economic development director, said he intends to discuss the potential sale with the Milwaukee County Board of Supervisors during its July cycle of meetings and then return in September, after the summer recess, with a formal request to sell the property.

If the County Board approves the sale, Northwestern Mutual would buy the property based on its appraised price of $14 million, but is asking for a $1.3 million discount. The company would use that $1.3 million to pay for roof repairs that Milwaukee County has identified as necessary, according to a report (PDF) on the sale Whaley-Smith prepared for the County Board.

Northwestern Mutual would assess the building’s structural integrity before finalizing a sale, according to a proposal overview provided by the company. O’Donnell Park has had structural problems. In 2013, Milwaukee County was found liable in the death of 15-year-old Greenfield resident Jared Kellner, who died after he was struck by a 13½-ton concrete façade panel that fell off O’Donnell Park in June 2010.

The deal would give Northwestern Mutual control of the majority of the structure’s 1,332 parking spaces during weekdays, except for 200 spaces reserved for the public, according to Whaley-Smith’s report. The company would keep all parking revenue, and the entire structure would be open to the public on weekends, holidays and weekday evenings.

According to a July parking study (PDF) conducted for Milwaukee County by Boston-based Desman Associates, the county sold a monthly average of 616 parking permits in 2012. During the periods of highest use, about 524 monthly permit holders and 151 hourly parkers had vehicles inside O’Donnell Park, meaning the structure usually was about half-empty. Desman projected that off-street parking demand in downtown Milwaukee will account for about 67 percent of 6,568 existing spaces if office occupancy downtown hits 75 percent.

According to a 2010 city of Milwaukee parking study, occupancy downtown was at 70 percent.

Jeff Fleming, spokesman for Milwaukee’s Department of City Development, said the city wants to support Northwestern Mutual.

“At the same time,” he said, “we will carefully review the interests of the public, the people of Milwaukee, in this potential transfer.”

According to the Desman study, the majority of hourly-rate parkers using O’Donnell Park were visiting either the Milwaukee Art Museum or the Betty Brinn Children’s Museum, and 200 spaces should be set aside to ensure their weekday needs would be met.

Of the monthly permit holders, 149 were Northwestern Mutual employees, according to the Desman study.

Brendan Conway, spokesman for Milwaukee County Executive Chris Abele, said the county would honor parking permit contracts until the property officially changed hands.

John Gardner, Northwestern Mutual spokesman, said it has not been determined whether non-Northwestern Mutual employees would be able to buy monthly parking passes after a sale.

Milwaukee County earned about $990,000 in net revenue from the parking structure in 2012, the last year tracked in Whaley-Smith’s report. The county has estimated revenue will remain relatively level, but its debt payments are scheduled to increase.

Milwaukee County still owes about $7.1 million for the parking structure, which was built in 1993, and retiring that debt would cost about $600,000 in interest and service costs, according to Whaley-Smith’s report. A $12.7 million deal would leave the county with about $5 million in profit, which would be spent to improve other county parks.

The plaza on top of the parking structure would remain a public park, according to Whaley-Smith’s report.

Under city of Milwaukee ordinance, if Northwestern Mutual attempted to rezone the plaza for use as something other than a park, Milwaukee County, as a nearby landowner, could force a super-majority of the city’s Common Council to vote on the proposal, which would pass only if at least three-fourths of the council agreed. That arrangement gives the county significant clout, even after a sale, to require the plaza remain a park. Follow @bkevit